Hidden Afflictions:
How Much Are Clunky Old Processes Costing You?
Plenty of industry leaders and experts talk about technical debt with old systems and tools,
yet very few speak of ‘process debt’ with the same level of importance.
A recent article by Christopher Mims in the Wall Street Journal, titled “The Invisible $1.52 Trillion Problem: Clunky Old Software” underpins this tenet and provides an informative read on the magnitude and impact of technical debt. Mims describes technical debt as “an accumulation of quick fixes and outdated systems never intended for their current use, all of which are badly in need of updating.”
This is a significant issue, not just in retail but across all sectors. And surprisingly or not, we often see this type of technology environment in use by leading, global retailers. As the article lays out, it is imperative to manage leadership and business expectations on trade-offs between constantly adding new features versus addressing foundational platform challenges. For retailers, this means addressing core systems that manage hierarchies, styles, attributes, vendors, purchase orders, pricing, inventory, and more.
We would argue that it is also imperative to address process debt.
Process debt is the tendency to continue doing things “because that’s the way we’ve always done it.” On the surface, process debt seems easier to address, since there is typically no substantial new technology involved. Conduct a few workshops at corporate, eliminate a process step here or there, make some minor changes to existing systems or reports, send out an email informing the impacted employees of the new process, and voila: issues solved.
As an example of process debt, in a recent store operations client project, we saw a wide variety of inconsistencies in how the store associates execute customer-impacting processes due to corporate-related issues and the lack of proper change management execution.
These process-related issues have a direct impact on store associate efficiency, customer experience, and more importantly, the company’s bottom line.
But let’s be real, ensuring your impacted people understand not just the new process, but the motivation behind the changes is not to be taken lightly. Further, the focus on changing behaviors, altering roles and responsibilities, changing the questions that leadership asks, along with associate training and sustainment, all together make for a daunting change management challenge.
Many retailers invest considerable time and money in taking part in the NRF Big Show, Shoptalk, and other industry events with the premise of learning about new ways to do things with fresh solutions. It is critical, however, that retail leaders understand the business value in changing behaviors and ‘why’ certain things are done—not just assuming a new solution will make the ‘what’ already happening that much better by itself.
Further, today’s executives are challenged by their leadership and boards to invest rapidly in all things AI-related. They do not want to be viewed as falling behind. It is easier for them to push modern technology, which they may know little about, versus having a difficult conversation about current business practices, which unfortunately many also know little about.
Technical debt exists because it is hard and expensive to address.
Process debt exists because few people like change, and change is hard.
Leading retailers tackle both technical and process debt simultaneously with a comprehensive capabilities assessment and roadmap. This roadmap involves collaboration with IT and business leadership on balancing systems, business processes, and other capability improvements over time. Process changes often can be effectively addressed in the shorter-term time horizons with much less capital outlay than technology changes. And while process changes are still hard, when managed appropriately, the positive impact of quick wins can boost the momentum and engagement for longer-term projects.
If you are challenged with process debt, we would love the opportunity to discuss doing a capabilities assessment to pinpoint areas where new processes can make meaningful impacts for your company.
Contributor
The Parker Avery Group is a leading retail and consumer goods consulting firm that specializes in transforming organizations and optimizing operational execution through the development of competitive strategies, business process design, deep analytics expertise, change management leadership, and implementation of solutions that enable key capabilities.
